Latest news with #reserveCurrency
Yahoo
18 hours ago
- Business
- Yahoo
Markets Await Comment from ECB's Lagarde on Euro's Reserve Currency Role This Week
The euro rose to a six-week high against the dollar and MUFG said any comments by Christine Lagarde on the euro in the context of its future reserve currency status would be watched closely at Thursday's meeting.
Reuters
5 days ago
- Business
- Reuters
Japan likely held off US Treasury sales, says ex-BOJ policymaker
TOKYO, May 29 (Reuters) - Japan likely held off selling from its huge U.S. Treasury holdings as there is no alternative investment given the dollar's status as a global reserve currency, former Bank of Japan (BOJ) policymaker Sayuri Shirai said on Thursday. Japan and China are the two largest holders of U.S. Treasuries, making their presence a huge focus of attention whenever U.S. yields spike. Although both countries say little about their trading, the huge U.S. Treasury sell-off in April has led to market speculation they could have, or might have, unloaded their holdings. "Japan probably hasn't sold its holdings as there's nothing else to buy. What countries including Japan want to hold onto as a reserve currency is the dollar rather than the euro," Shirai told Reuters in an interview. "The dollar's dominance as a reserve currency is unwavering" given the depth of U.S. capital markets and the country's technological competitiveness, she said, ruling out the idea of Japan diversifying out of U.S. assets. Now a professor at Keio University, Shirai retains close contact with current global policymakers. U.S. President Donald Trump's sweeping tariff announcement on April 2 led to a market rout, including in U.S. Treasuries, casting doubt over the dollar's status as the safest haven for the global financial system. Trump's previous complaints about the strong dollar also raised suspicions that Washington wants an adjustment lower in the world's top reserve currency. European Central Bank President Christine Lagarde said on Monday the euro could become a viable alternative to the dollar if the bloc's governments could strengthen its financial and security architecture. But Shirai said she had doubts the euro could become a real alternative to the dollar, as a politically fragmented Europe and a lack of depth in the region's capital markets diminish its allure as a reserve currency. In Asia, China's yuan is the more likely potential competitor to the dollar, she said. "Europe is a distant region for Asia and not a big trade destination," Shirai said. "China, by contrast, is boosting its presence in Asia with an increasing volume of trade now using the yuan," Shirai said. "While the dollar will remain the dominant currency in Asia, the increase in yuan-denominated trade will likely continue." The dollar's role has been on the decline for years. The currency now makes up 58% of international reserves, the lowest level in decades - but still well above the euro's 20% share, according to data from the International Monetary Fund. The share of holdings in yuan stood at 2% and the Japanese yen at 5.8%.
Yahoo
5 days ago
- Business
- Yahoo
Japan likely held off US Treasury sales, says ex-BOJ policymaker
By Leika Kihara TOKYO (Reuters) -Japan likely held off selling from its huge U.S. Treasury holdings as there is no alternative investment given the dollar's status as a global reserve currency, former Bank of Japan (BOJ) policymaker Sayuri Shirai said on Thursday. Japan and China are the two largest holders of U.S. Treasuries, making their presence a huge focus of attention whenever U.S. yields spike. Although both countries say little about their trading, the huge U.S. Treasury sell-off in April has led to market speculation they could have, or might have, unloaded their holdings. "Japan probably hasn't sold its holdings as there's nothing else to buy. What countries including Japan want to hold onto as a reserve currency is the dollar rather than the euro," Shirai told Reuters in an interview. "The dollar's dominance as a reserve currency is unwavering" given the depth of U.S. capital markets and the country's technological competitiveness, she said, ruling out the idea of Japan diversifying out of U.S. assets. Now a professor at Keio University, Shirai retains close contact with current global policymakers. U.S. President Donald Trump's sweeping tariff announcement on April 2 led to a market rout, including in U.S. Treasuries, casting doubt over the dollar's status as the safest haven for the global financial system. Trump's previous complaints about the strong dollar also raised suspicions that Washington wants an adjustment lower in the world's top reserve currency. European Central Bank President Christine Lagarde said on Monday the euro could become a viable alternative to the dollar if the bloc's governments could strengthen its financial and security architecture. But Shirai said she had doubts the euro could become a real alternative to the dollar, as a politically fragmented Europe and a lack of depth in the region's capital markets diminish its allure as a reserve currency. In Asia, China's yuan is the more likely potential competitor to the dollar, she said. "Europe is a distant region for Asia and not a big trade destination," Shirai said. "China, by contrast, is boosting its presence in Asia with an increasing volume of trade now using the yuan," Shirai said. "While the dollar will remain the dominant currency in Asia, the increase in yuan-denominated trade will likely continue." The dollar's role has been on the decline for years. The currency now makes up 58% of international reserves, the lowest level in decades - but still well above the euro's 20% share, according to data from the International Monetary Fund. The share of holdings in yuan stood at 2% and the Japanese yen at 5.8%.
Reuters
5 days ago
- Business
- Reuters
Lagarde's euro 'battle cry' emphasizes EU cash need
LONDON, May 28 (Reuters) - If the euro supplants the dollar as the world's main reserve currency, Europe might lose some currency competitiveness - but the related capital flows it's seeking more than compensate. European Central Bank President Christine Lagarde, opens new tab weighed in on the debate about the euro's global reserve status on Tuesday by reiterating the ECB's long-standing aim to boost the currency's wider use and position it as the logical alternative to the dollar. The euro has long been the clear second choice in reserve usage, both in the positive and negative sense. While its share of overall reserve coffers is still far behind the dollar's, the euro is way ahead of any other serious rivals to the greenback bar gold. But what was eye-catching about the very vocal ECB support for wider euro usage was the timing and thrust. Lagarde's statements come amid fresh doubts about the dollar's haven status, the U.S. economy's role in the world at large and America's fraying geopolitical alliances - as well as the Trump administration's perceived desire for a weaker, more competitive exchange rate. And Lagarde's speech clearly framed U.S. difficulty as Europe's opportunity. After noting that the dollar and U.S. financial markets had been effective global anchors for decades, she added that "when doubts emerge about the stability of the legal and institutional framework, the impact on currency use is undeniable." "These doubts have materialised in the form of highly unusual cross-asset correlations since April 2 this year, with the U.S. dollar and U.S. Treasuries experiencing sell-offs even as equities fell," the ECB chief explained, referring to market ructions after U.S. President Donald Trump's 'reciprocal tariff' gambit last month. "The EU has a legitimate reason to turn its commitment to predictable policymaking and the rule of law into a comparative advantage," Lagarde added, underscoring the need for political and internal capital market reforms in the EU that would enable the bloc to seize this opportunity. Clearest of all was her plea for joint debt issuance to boost the scale of 'safe' euro assets, a move that is still controversial within Europe due to persistent German pushback. "Economic logic tells us that public goods need to be jointly financed," she said, re-upping the ECB's preference for expanding the pool of jointly issued euro assets. And she also pointedly underlined the attraction of Europe's military rearmament to official investors who "seek geopolitical assurance in another form: they invest in the assets of regions that are reliable security partners and can honour alliances with hard power." The frank speaking caught everyone's attention. Rabobank strategist Jane Foley said the speech had a 'battle cry' element to it. It's still anyone's guess what the outcome will be of the bilateral U.S.-EU trade talks come July's deadline and as a host of disagreements remain. Trump's jarring stop/start EU tariff announcements this past weekend make it difficult to sketch out a possible resolution, and many experts suspect Washington is intent on talking to individual countries to split the group. The tone of the ECB's stance suggests it's bracing for the risk of harsher standoffs ahead. What's more, Lagarde's statement comes as the euro's nominal broad exchange rate has soared to record highs, up almost 20% over the past decade. While that won't please many exporters in the bloc, it does suggest that the ECB - unlike the U.S. administration - is comfortable with its currency's structural strength and thus may be willing to ease policy accordingly. And that will help with the additional debt financing needed of Europe's ambitious new projects - most notably in defense, green energy and tech. On that financing need, central and private sector bankers tend to agree with former ECB chief Mario Draghi about the scale of what is needed, as outlined in his recommendations last summer., opens new tab For example, BNP Paribas economist Laurent Quignon, opens new tab wrote on Tuesday about the total sums needed, as he made a pitch on what Europe can do this year to boost financing via changes to regulation, securitization and the banking union. Adding Draghi's call for annual energy and tech investments of up to 800 billion euros to an almost 200 billion euros of new defense spending and on top of ongoing commitments, he calculated an additional annual EU financing requirement of 1.5 trillion euros through 2028 and 1.4 trillion from then to 2030. That would be more than double the flows observed in the decade through 2024 - and about the same as the total amount of European money that has flowed into the U.S. equity market since 2012. Whatever the implications for exchange rate competitiveness, Europe now has a big bill to pay. Some 'exorbitant privilege' would help. The opinions expressed here are those of the author, a columnist for Reuters
Bloomberg
26-05-2025
- Business
- Bloomberg
ECB's Lagarde Says Erratic US Policies Create Euro Opportunity
Good morning. ECB Chief Christine Lagarde says it may be time for the euro to shine. EU regulators tell Shein to deal with consumer protection violations, or else. And India has developed a new weather model to better predict rainfall. Listen to the day's top stories. It's time to take advantage. European Central Bank President Christine Lagarde says Donald Trump's erratic policies are creating a ' prime opportunity ' to strengthen the euro's international role as a reserve currency and let the bloc enjoy lower borrowing costs and protections from sanctions. Her comments show how policymakers are seeking to turn Trump's attacks on trade and US institutions to their benefit.
